Advertising on the Internet has been "an absolute, complete, unmitigated failure," said Jason McCabe Calacanis, editor and CEO of Silicon Alley Reporter. He addressed a crowd Thursday largely composed of ecommerce executives, at the Komm conference held as part of the Internet Commerce Expo (ICE).
Calacanis placed the blame for the failure of Web sites to generate steady advertising revenue squarely on the banner ad which has "trained our consumers to believe that content is free," he said.
"We standardized a failed concept. That's how stupid we are in the Internet industry," Calacanis said.
He went on to say that until now, content has been funded by venture capital - consumers have been getting a free ride. But since the nosedive in technology stocks in April, that model is outmoded.
"We have to come up with a form of advertising on the Internet that's disruptive," he continued.
Video and audio will revolutionize the Web thanks to cheap digital video cameras and editing suites, according to Calacanis.
"Imagine if you had that when you were six years old," Calacanis said.
He said that just as he grew up knowing how to use a word processor, for the next generation manipulating video will be second nature.
"They have a literacy for video that we will never have; just like we know how to use a remote control much better than our parents do," Calacanis said.
According to Calacanis, animated advertising works better than banners because pictures appeal to users' emotions in a way text never can. "We have to stop users and say, 'Before you look at my content, stop and look at this 15-second ad. And enjoy looking at it, because if it weren't for the ad, you'd have to give me money.'"
He closed by urging his mostly German audience to avoid copying what he called bad American ideas. Calacanis said that every place he goes in Europe, "somebody says, I'm going to be the EBay or the Priceline or the Yahoo of France or Germany or Copenhagen or whatever."
But Europeans should look to their own markets for original ideas that haven't been tried yet, Calacanis stressed.
"Make Legos, for God's sake," he said, referring to the popular children's building blocks made in Denmark but sold worldwide.
"Make something that everybody can use, that hasn't been done before. That's the opportunity of the Internet, and that's what I encourage you to do."